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The UK’s Beauty Salon Industry

The Beauty Salon Industry has grown significantly in the past decade, and the amount spend on personal grooming in the United Kingdom reached £8.6 billion.  It was equivalent to average individual spend of £166 on personal care treatments. Even after the Covid 19, the industry witnessed a 432% spike in bookings, which shows that with the normalisation of the pandemic, the demand for personal grooming services is expected to increase significantly (policybee.co.uk 2021).  This report focuses on developing a lean management business plan that focuses on waste reduction and uses a concept of continuous improvement to ensure small incremental changes in the emergency salon segment by ensuring high quality and efficiency.  Thus, the business model aims to eliminate waste at each of the stages to achieve a higher level of profits.

Beauty Port will be the first airport hair salon launched at Heathrow, and even though the concept has been prevalent in other countries, there are no such salons are airports for emergency purposes.  The evaluation of surveys has shown that the majority of female consumers visit salons for quick setups and blow-dry (policybee.co.uk 2021).  Beauty Port offers opportunities to passengers jumping off planes looking for a fresh look, which helps the consumers in looking presentable at all times. The salons are a unisex salon so both men and women clients can get groomed for their appointments at a cost of £20-£40, where the charges are a little higher for women compared to men.  The average cost for a quick blow-dry is expected to be £30 with an additional £10 for a cut (Swinnerton 2017).

The evaluation of the past five years shows that the barbering, beauty, and hairdressing industry has grown by 54%, and was one of the strongest industries prior to the pandemic with an exponential increase in salons.  The future predictions have also shown that the industry is expected to grow by 16% by 2023 and reach 56,484 stores (Swinnerton 2017). A recent report by the National Hair & Beauty Federation showed that the industry has been hit hardest during the lockdowns with a turnover reduction of 45% in 2020 when compared to the turnover in 2019.  Moreover, the salon capacity was reduced to 70% due to the social distancing norms with full-time employment reduced to 21% based on the figures in 2019.  However, the report also showed that 66% of the business owners were confident that their business will survive even after the pandemic (policybee.co.uk 2021).  

 Therefore, the current research focuses on understanding the objective of the business for the next five years so that effective strategies can be developed. It also takes into the customer value proposition, lean business canvas model, and overall business plan. The business plan consists of the marketing plan, financial plan, operation plan, technological plan and human resources aspects.

The business objectives have been developed using a SMART framework that has developed feasible, measurable, and attainable objectives for Beauty Port.  The main objective of any start-up is building the brand by gathering consumers and achieving a significant share in the market. In this respect, the objectives of the business are as follows:

  • To increase the market share of the company by 10% within the next 5 years
  • To increase the online presence and following on social media by 30% within the next 3 years
  • To achieve the break-even revenue within the first three years of operations
  • To achieve a profit margin of 10% within the five years of operations

Beauty Port – The First Airport Hair Salon in Heathrow

The first objective deals with improving the market share by 10% as it is essential to occupy a significant market at the initial stage through customer acquisition and retention.  Customer acquisition and retention will be key to the sustainability and liquidity of the business. The next aspect is improving the online presence through brand development on social media as social media is key to increasing the awareness of the consumers.  It is essential for businesses to reach break-even as soon as possible for generating profits so achieving break-even within the first three years is essential for managing liquidity and sustainability. Once the profit margin has been achieved, the business needs to increase its profits through economies of scale and higher levels of sales volumes.

Value proposition canvas

Figure 1: Value proposition canvas

Source: As created by the author

The value proposition canvas has been developed to address the major pain points of the consumers by offering them benefits through products and services.  The major pain points of the consumers show that various passengers fail to get themselves groomed for business and holiday trips due to lack of time, and reluctance to go out due to the pandemic (Meng, Somenahalli and Berry 2020). Moreover, the consumers have become sceptical about the different services in beauty salons as pandemic has developed a fear within the minds of the consumers.  Therefore, offering beauty services to the consumers will result in relaxation and grooming of the consumers making them feel good about themselves which can also increase their confidence level (Belleflamme and Neysen 2021).

The service is for those consumers having less amount of time or who are reluctant to go to the beauty salon.  These consumers have a desire to look good for their meetings and different events but they do not have the time to visit a salon. The services will have a significant satisfaction for the consumers as the consumers will be provided with a soothing and relaxing services that can make enhance their traveling experience significantly (Meng, Somenahalli and Berry 2020). Moreover, the organisation will use trusted products for their salons and will ensure all the products are tested, and none of them have a side effect on the consumers.  Therefore, beauty port provides an option to the consumers where they can choose to look good whenever they are traveling for holidays or business meetings, and the salon works for all influencers and celebrities who have to look good at all times.

The company will consist of the best hairdressers that can provide a haircut within seven minutes and a blow dry within 10 minutes. This will be an express service where the focus will be offering the best possible services at the fastest time possible, so beauty port will offer both skilled and fast services to the consumers at the same prices to the consumers. This is will differentiate the consumers from other companies resulting in success of the business.

Lean business canvas model

Figure 2: Lean business canvas model

Source: As created by the author

Beauty Port – The Value Proposition Canvas

The key partners of the business consist of the investors and the talent hairdressers, groomers and make up artists.  These two are key partners for the business as the investors are responsible for investing significant amount of sum for developing the best possible décor and machineries for the salon, where as the hair dressers are responsible for using the available resources to offer the best possible services to the passengers (Duarte, do Rosário Cabrita and Cruz-Machado 2019).

The key activities offered by the business consist of hair styling, nail styling, makeup, manicure and pedicure.  These are basic services offered in salons but the differentiating point is that it will be available at the airport and it will be an express service so faster and quality service to the consumers so they do not get delayed for their flights.

The business will offer quality services to the consumers at premium price point as beauty port consists of skilled employees offering the best services to the consumers. The major pain points of the consumers show that various passengers fail to get themselves groomed for business and holiday trips due to lack of time, and reluctance to go out due to the pandemic (Duarte, do Rosário Cabrita and Cruz-Machado 2019). Moreover, the consumers have become sceptical about the different services in beauty salons as pandemic has developed a fear within the minds of the consumers.  Therefore, offering beauty services to the consumers will result in relaxation and grooming of the consumers making them feel good about themselves which can also increase their confidence level.

 The company will offer customised and personalised services to each of the consumers to improve the quality of services and managing the relationships with them. In this respect, the skills of the staffs will play a significant role in ensuring quality of improvement in the services offered.

 The business will use both traditional and digital medium to promote the offerings of the business where the company will ensure that flyers, posters and social media campaigns are developed to improve the awareness of the brand in the market (Duarte, do Rosário Cabrita and Cruz-Machado 2019). Social media will be used to interact with the consumers and address all their queries regarding the requirements.

The salon will be a unisex salon but majority of the focus will be on women between the age group of 50 to 70 years and between the age group of 30-50 years.  These consumers are expected to have a higher disposable income and are busy in their life so are looking for the best possible services that offers relaxation as well grooming to the consumer (Duarte, do Rosário Cabrita and Cruz-Machado 2019). The male consumers will also be targeted by the company where the consumers between the age group of 25-50 years will be focused on.  Men are frequent in business travels and may want to look good while traveling so catering to these segments can prove to be effective for the consumers.

The major resource requirements consist of human resources and beauty equipment, and ingredients for offering the best possible services to the consumers. It will include chairs, mirrors, cutting equipment, pedicure and manicure equipment and similar other equipment.

The cost structure will include salaries of the staffs, cost of establishing the business that includes rent, cost of equipment, cost of marketing and other cost of renovation.

The revenue will be generated from the services offered by Beauty port on a regular basis. The retail sales will be the only source of income for the business.

Marketing Plan

The marketing plan shows that the business will focus on both traditional and digital marketing tools to promote the offerings and the brand. However, the major focus of the brand will be on the digital marketing aspects where social media marketing and influencer marketing will be used to gain consumers. Social media is key to attracting consumers as people follow trends on social media and imitate the celebrities.  Therefore, it will focus on providing information to the consumers regarding the offerings of the business, and influencer marketing will be used to share videos of famous social media influencers using the services offered by the business.

The human resource requirements of the business consist of the staffs required for hairdressing makeup and other grooming services.  In this respect, the business will hire two staffs for offering the services along with a manager.

Sources of Capital

Startup Expenses

Owners' Investment (name & % ownership)

Buildings / Real Estate

Your name & % ownership

£25,000.00

Purchase

£0.00

Equity Loan

£100,000.00

Construction

£10,000.00

Other Investor

£0.00

Remodeling

£10,000.00

Other Investor

£0.00

Other

£0.00

Total Investment

£125,000.00

Total Buildings and R / E

£20,000.00

Bank Loans

Leasehold Improvements

Bank 1

painting

£1,500.00

Bank 2

£0.00

lighting

£1,500.00

Bank 3

£0.00

plumbing

£1,000.00

Bank 4

£0.00

Display shelves

£2,500.00

Total Bank Loans

£0.00

Total L / H Improvements

£6,500.00

Other Loans

Capital Equipment List

Source 1

£0.00

Furniture

£4,000.00

Source 2

£0.00

Equipment

£10,000.00

Total Other Loans

£0.00

Fixtures

£5,000.00

Machinery

£10,000.00

Other

£0.00

Summary Statement

Total Capital Equipment

£29,000.00

Sources of Capital

Location and Admin Expenses

Owners' and Other Investments

£125,000.00

Rental

£36,000.00

Bank Loans

£0.00

Utility Deposits

£5,000.00

Other Loans

£0.00

Legal and Accounting Fees

£2,000.00

Total Source of Funds

£125,000.00

Prepaid Insurance

£5,000.00

Pre-opening Salaries

£15,000.00

Startup Expenses

Other

£0.00

Bldgs / Real Estate

£20,000.00

Total Location and Admin Expenses

£63,000.00

Leasehold Improvements

£6,500.00

Capital Equipment

£29,000.00

Opening Inventory

Location / Admin Expenses

£63,000.00

Category 1

Opening Inventory

£0.00

Category 2

Advertising / Promo Expenses

£1,900.00

Category 3

£0.00

Other Expenses

£30,000.00

Category 4

£0.00

Total Startup Expenses

£150,400.00

Category 5

£0.00

Total Inventory

£0.00

Advertising and Promotional Expenses

Advertising

£400.00

Signage

£500.00

Printing

£500.00

Travel & Entertainment

£500.00

Other / Additional categories

Total Adv and Promo expenses

£1,900.00

Payroll and payroll taxes

Expense 1

£15,000.00

Expense 2

£15,000.00

Total Payroll and payroll taxes

£30,000.00

Year-by-year profit and loss assumptions

Year 2

Year 3

Year 4

Year 5

Annual cumulative price (revenue) increase

£0.02

£0.04

£0.06

£0.08

Annual cumulative inflation (expense) increase

£0.02

£0.04

£0.06

£0.08

Interest rate on ending cash balance

£0.01

£0.01

£0.01

£0.01

Year 2

Year 3

Year 4

Year 5

Revenue

Gross revenue

£130,560.00

£135,782.40

£143,929.34

£155,443.69

Cost of goods sold

£19,584.00

£20,367.36

£21,589.40

£23,316.55

Gross margin

£110,976.00

£115,415.04

£122,339.94

£132,127.14

Other revenue [source]

£0.00

£0.00

£0.00

£0.00

Interest income

£0.00

£0.00

£0.00

£0.00

Total revenue

£110,976.00

£115,415.04

£122,339.94

£132,127.14

Operating expenses

Sales and marketing

£1,938.00

£2,015.52

£2,136.45

£2,307.37

Payroll and payroll taxes

£30,600.00

£31,824.00

£33,733.44

£36,432.12

Depreciation

£11,322.00

£11,544.00

£11,766.00

£11,988.00

Maintenance, repair, and overhaul

£1,479.00

£1,508.00

£1,537.00

£1,566.00

Total operating expenses

£45,339.00

£46,891.52

£49,172.89

£52,293.48

Operating income

£65,637.00

£68,523.52

£73,167.05

£79,833.66

Interest expense on long-term debt

£0.00

£0.00

£0.00

£0.00

Operating income before other items

£65,637.00

£68,523.52

£73,167.05

£79,833.66

Loss (gain) on sale of assets

£0.00

£0.00

£0.00

£0.00

Other unusual expenses (income)

£0.00

£0.00

£0.00

£0.00

Earnings before taxes

£65,637.00

£68,523.52

£73,167.05

£79,833.66

Taxes on income

£0.30

£19,691.10

£20,557.06

£21,950.12

£23,950.10

Net income (loss)

£45,945.90

£47,966.46

£51,216.94

£55,883.56

Cumulative income

£90,990.90

£138,957.36

£190,174.30

£246,057.86

Assets

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

Cash and short-term investments

-£25,400.00

£11,396.48

£48,884.50

£87,699.41

£128,536.49

£172,457.95

Accounts receivable

£2,560.00

£2,611.20

£2,715.65

£2,878.59

£3,108.87

£3,108.87

Total inventory

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Prepaid expenses

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Deferred income tax

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Other current assets

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Total current assets

-£22,840.00

£14,007.68

£51,600.15

£90,578.00

£131,645.36

£175,566.82

Buildings

£20,000.00

£20,000.00

£20,000.00

£20,000.00

£20,000.00

£20,000.00

Land

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Capital improvements

£6,500.00

£6,500.00

£6,500.00

£6,500.00

£6,500.00

£6,500.00

Machinery and equipment

£29,000.00

£29,000.00

£29,000.00

£29,000.00

£29,000.00

£29,000.00

Less: Accumulated depreciation expense

£0.00

£11,100.00

£22,422.00

£33,966.00

£45,732.00

£57,720.00

Net property/equipment

£55,500.00

£44,400.00

£33,078.00

£21,534.00

£9,768.00

-£2,220.00

Goodwill

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Deferred income tax

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Long-term investments

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Deposits

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Other long-term assets

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Total assets

£32,660.00

£58,407.68

£84,678.15

£112,112.00

£141,413.36

£173,346.82

Liabilities

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

Accounts payable

£384.00

£391.68

£407.35

£431.79

£466.33

£466.33

Accrued expenses

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Notes payable/short-term debt

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Capital leases

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Other current liabilities

Total current liabilities

£384.00

£391.68

£407.35

£431.79

£466.33

£466.33

Long-term debt from loan payment calculator

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Other long-term debt

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Total debt

£384.00

£391.68

£407.35

£431.79

£466.33

£466.33

Other liabilities

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Total liabilities

£384.00

£391.68

£407.35

£431.79

£466.33

£466.33

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

Owner's equity (common)

£125,000.00

£125,000.00

£125,000.00

£125,000.00

£125,000.00

£125,000.00

Paid-in capital

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Preferred equity

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Retained earnings

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Total equity

£125,000.00

£125,000.00

£125,000.00

£125,000.00

£125,000.00

£125,000.00

Total liabilities and equity

£125,384.00

£125,391.68

£125,407.35

£125,431.79

£125,466.33

£125,466.33

Year 1

Year 2

Year 3

Year 4

Year 5

Total

Operating activities

Net income

£45,045.00

£45,945.90

£47,966.46

£51,216.94

£55,883.56

£246,057.86

Depreciation

£11,100.00

£11,322.00

£11,544.00

£11,766.00

£11,988.00

£57,720.00

Accounts receivable

-£51.20

-£104.45

-£162.94

-£230.29

£0.00

-£548.87

Inventories

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Accounts payable

£7.68

£15.67

£24.44

£34.54

£0.00

£82.33

Amortization

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Other liabilities

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Other operating cash flow items

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Total operating activities

£56,101.48

£57,179.12

£59,371.97

£62,787.19

£67,871.56

£303,311.32

£0.00

Investing activities

£0.00

Capital expenditures

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Acquisition of business

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Sale of fixed assets

-£19,305.00

-£19,691.10

-£20,557.06

-£21,950.12

-£23,950.10

-£105,453.37

Other investing cash flow items

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Total investing activities

-£19,305.00

-£19,691.10

-£20,557.06

-£21,950.12

-£23,950.10

-£105,453.37

Financing activities

Long-term debt/financing

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Preferred stock

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Total cash dividends paid

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Common stock

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Other financing cash flow items

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Total financing activities

£0.00

£0.00

£0.00

£0.00

£0.00

£0.00

Cumulative cash flow

£36,796.48

£37,488.02

£38,814.91

£40,837.08

£43,921.46

£197,857.95

Beginning cash balance

-£25,400.00

£11,396.48

£48,884.50

£87,699.41

£128,536.49

Ending cash balance

£11,396.48

£48,884.50

£87,699.41

£128,536.49

£172,457.95

Thus, it can be suggested that the business focuses on offering the best possible services to the consumer at the premium price, and addresses their pain points to make them feel confident and relaxed while traveling. Beauty port will achieve their break even point after 4.5 years of operation, which shows that the return on investment is quite considering the pandemic.

References

Belleflamme, P. and Neysen, N., 2021. A Multisided Value Proposition Canvas for Online Platforms. Journal of Business Ecosystems (JBE), 2(1), pp.1-14.

Duarte, S., do Rosário Cabrita, M. and Cruz-Machado, V., 2019, August. Business model, lean and green management and industry 4.0: A conceptual relationship. In International Conference on Management Science and Engineering Management (pp. 359-372). Springer, Cham.

Meng, L., Somenahalli, S. and Berry, S., 2020. Policy implementation of multi-modal (shared) mobility: review of a supply-demand value proposition canvas. Transport Reviews, 40(5), pp.670-684.

policybee.co.uk, 2021. UK hair and beauty industry statistics 2021. [online] PolicyBee news and risk advice. Available at: <https://www.policybee.co.uk/blog/uk-hair-and-beauty-industry-statistics-2021> [Accessed 9 January 2022].

Swinnerton, L., 2017. UK's first express airport hair salon launches at Heathrow Airport. [online] MyLondon. Available at: <https://www.mylondon.news/news/west-london-news/hairport-arrives-london-uks-first-12813615> [Accessed 9 January 2022].

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